60 th Congress. 
1st Session . 


Session . 


SENATE. 


j Doc 
j No. 


Document 
No. 308. 


SUPERANNUATION IN CLASSIFIED CIVIL SERVICE. 


MESSAGE 


FROM THE 


PRESIDENT OF THE UNITED STATES, 


TRANSMITTING 


u> 

A REPORT BY THE COMMITTEE ON DEPARTMENTAL METHODS 
ON THE SUBJECT OF SUPERANNUATION IN THE CLASSIFIED 
CIVIL SERVICE; ALSO A DRAFT OF A PROPOSED BILL WHICH 
PROVIDES FOR THE PAYMENT OF ANNUITIES TO EMPLOYEES 
UPON RETIREMENT. 


February 21,1908.—Read; referred to the Committee on Appropriations and ordered 

to be printed. 


To the Senate and House of Representatives: 

I transmit herewith for the consideration of the Congress a report 
by the Committee on Department Methods on the subject of super¬ 
annuation in the classified civil service; also a draft of a proposed bill 
which provides for the payment of annuities to emplo} 7 ees upon 
retirement. 


Theodore Roosevelt. 


The White House, February £1, 1908 . 


Washington, February 18, 1908. 


The President: 

The Committee on Department Methods submits herewith a report 
by the subcommittee on personnel on the subject of superannuation in 
the classified civil service, and also draft of a proposed bill which pro¬ 
vides for the payment of annuities to employees upon retirement. 

We are in accord with the recommendations contained in the report. 

Yours, very respectfully, 


Lawrence O. Murray, 
Gifford Pinchot, 


Committee on Department Methods . 


Washington, D. C., February 18 , 1908. 


Gentlemen: Your subcommittee on personnel has the honor to 
submit the following report on the question of superannuation: 

Suitable provision for the retirement of aged civil employees of the 
Government is desirable on two grounds: 

(1) Asa means of improving the public service, since the possible 
loss to the Government through the superannuation of its employees 


















SUPERANNUATION in 


IKT'i v 

A 5 a 

\*\£> 9 

CLASSIFIED CIVIL SERVICE. 


is estimated by the National Civil Service Reform League to be about 
$400,000 in the Departments at Washington and about $800,000 out¬ 
side of Washington; or, in the whole classified service of the United 
States, $1,200,000. 

(2) As an act of justice to the faithful employees. 

The salaries paid are seldom sufficient to admit of laying aside any¬ 
thing for old age, especially in Washington, where the expenses of 
living are now out of all proportion to the compensation received. 
The average salary paid by the Government, according to Census 
Bulletin No. 12, is only $1,072, a sum sufficient perhaps for celibates 
that cherish but a paltry ambition, but most assuredly not adequate 
for persons of commendable aspirations or encumbered with the 
responsibilities and obligations of family ties. 

And your subcommittee believes that a provision for retirement can 
be made efficient, just, and successful only by reserving to the Govern¬ 
ment itself the administration of the plan. 

It has been urged that the Government keep clear of association 
with any undertaking of retirement on the ground that a measure for 
that purpose would be used as an entering wedge, or its ruins would 
form a stepping-stone, for the establishment of a civil pension law, 
and because the Government ought not to engage in the insurance 
business. But retirement would be impossible except by Federal law, 
and we do not discern any likelihood whatever that a well-formulated 
plan of retirement upon a proper basis would ever lead to or pave the 
way for the pensioning of its employees by the Government, and we 
do not see any reason why the Government should not, in furtherance 
of its own interests, assume supervision and intimate control and man¬ 
agement of those features of the affairs of its employees that so directly 
affect its own welfare and are inseparable therefrom. 

Many efforts have been made to devise a measure which would afford 
the necessary relief at once to the service and the employees, and 
scores of bills on the subject have been introduced in Congress. None 
has succeeded, because each and every one shows on analysis that it is 
unfair either to the employer or to the taxpayer, or else that it 
discriminates unjustly between different classes of employees. 

The bills that have been presented may be divided into two classes: 

(1) Those proposing that annuities be paid out of the Federal 
Treasury. 

(2) Those providing for a uniform deduction of a given percentage 
from all salaries for the creation of a general fund from which all 
employees on retiring at the age of 70 shall receive annuities, payments 
to begin a certain number of years from the passage of the bill. 

These bills generally provide that an employee must serve for at 
least ten years before he may be entitled to an annuity on retirement. 
Some provide for a uniform deduction of a given percentage from all 
pay and the pa 3 ^ment of annuities based on length of service. 

In view of the public sentiment against a civil pension list, it is not 
necessary to discuss the bills of the first class. Those of the second 
class are open to the serious objection that they are unjust to the 
younger employees, since they require them to set aside a much larger 
percentage of their salaries in order to create a fund for the older men 
than would be necessary to provide annuities for themselves alone. 
The defect in all such plans is apparent to every student of the subject 


MAH & 

o. ci a 



Q t 


SUPERANNUATION IN CLASSIFIED CIVIL SERVICE. 3 

and is very clearly explained in a report treating of this subject by 
the National Civil Ser vice Reform League, as follows: 

In general, any plan of uniform or “flat-rate” assessment, to begin practically at 
once to take care of the aged, is a great injustice to the younger employees. The 
old will receive support after they have paid but a few years, and can pay but a few 
years more, even if assessments are continued on the retirement receipts. The 
young will have to pay a much larger sum from their salaries than would be required 
for their old age alone. If, by any chance, the fund should prove to be too small, that 
would transpire only many years hence, when those now aged would have received 
their full allowances and passed from the stage. The others, the present younger 
employees, who would have borne the great brunt of expensive assessments, would 
thus be the ones to suffer, unless the Government made up the deficiency. 

This argument is sound. It follows then that any plan for the 
retirement of superannuated civil-service employees, for which the 
approval of employees themselves and the public alike is desired, 
should contain the following provisions: 

(1) The funds necessary for the payment of the annuities should be 
furnished by the employees themselves without expense to the Gov¬ 
ernment other than the payment of allowances to those employees now 
in the service whose contributions would not be sufficient to provide 
for their own retirement and the payment of salaries to the clerical 
force required to keep the accounts and distribute the funds. 

(2) Each employee should contribute the amount necessary to create 
his own annuity without regard to payments by others, so that each 
employee may receive full return on the money contributed by him. 

(3) The annuities to be paid employees on retirement should be grad¬ 
uated according to length of service and in such manner that the 
monthly contributions required from employees for the creation of 
such annuites shall be in no case excessive. 

The plan recommended ultimately meets these conditions. It is 
founded on well-established principles, but they are applied in a new way. 

The general idea is that each individual shall provide the necessary 
fund for his own retirement. In presenting the plan it is well to divide 
the exposition into two parts: The first part makes provision for those 
whose services begin after the enactment of the law; the second part 
makes provision for those w 7 ho have been in the civil service at the time 
of the passage of the measure for a longer or shorter period. 

It is proposed to pay every employee in the classified civil service on 
arriving at the age of retirement an annuity equal to 1.5 per cent of 
his pay for every year of service. For the purpose of illustration, 
assume that an emplo} T ee entered the service at 20 years of age and 
received a salary of $1,200 per annum through fifty years, when he 
reached the retiring age of 70. One and one-half per cent of $1,200 
is $18. This amount ($18) multiplied by his years of service, fifty, 
gives $900, which would be the amount of his annuity for the remain¬ 
der of his life. In actual practice, the employee’s compensation is 
usually increased from time to time, or may be decreased, but this 
does not interfere with the operation of the plan, for the deductions 
from his salary are increased or decreased in such an amount that the 
annuity upon retirement will still be 1.5 per cent of his salary for 
each year of service, regardless of the changes in salary or when they 
are made. This is a simple calculation, easily understood, and is fur¬ 
ther simplified by reducing the deductions from various salaries to a 
set of tables. 


SUPERANNUATION IN CLASSIFIED CIVIL SERVICE. 


4 


In order to provide the fund from which to pay the proposed 
annuity of 1.5 per cent of the emplo 3 T ee’s salary for each j 7 ear of 
service, a deduction should be made from the monthly salary of the 
employee that would be sufficient, with interest at 4 per cent per 
annum compounded annually, to purchase such annuity on arrival of 
the employee at the age of retirement. This sounds complex when 
stated in the abstract, but in practice the operation is simple. In the 
above illustration it was found that the annuity to be provided for at 
70 was $900 per year for the remainder of the employee’s life. The 
next step is to ascertain the cost of an annuity of $900 for life, be¬ 
ginning at the age of 70. The cost of an annuity is based on the 
probable length of life from a given age and interest at a given rate 
on the purchase price. The amount charged by insurance companies 
for an annuity of $100 on the nonpaiticipating plan, beginning at 70, 
is $742. Therefore the annuity of $900 desired in this illustration 
would cost nine times $742, or $6,678. 

The cost of this annuity being ascertained, the next step is to deter¬ 
mine what sum must be set aside monthly to accumulate with 4 per 
cent interest, compounded annually, $6,678 during the employee’s fifty 
years of service from 20 to 70. By reference to an interest table it 
will be seen that a deposit of $1 per month for fifty" }^ears, with interest 
compounded annually at 4 per cent, amounts to $1,871.48. The num¬ 
ber of dollars per month that would be necessary to accumulate 
$6,678 is ascertained by dividing $6,678 by $1,871.48. This gives 
$3.57 as the amount to be deducted from a salary of $100 per month 
for a service of fifty years in order to accumulate $6,678, which is 
sufficient to purchase an annuity of $900 per annum beginning at the 
age of 70 years. The amounts deducted from salaries will vary with 
the age of entering the service and with the amount of the salaiy. 
Deductions do not increase with age, but onty with the increase of 
salaiy. They will in no sense be an “assessment,” unjustly burdening 
the younger employees for the benefit of the older. Instead, they are 
sums set aside as savings in the United States Treasury bv each indi¬ 
vidual employee and to be invested b} T the Government for his own 
ultimate benefit, or that of his family, and with the knowledge that 
under safe and wise management the total will, at the age of 70 years, 
be sufficient to purchase a reasonable annuity. He will in no way con¬ 
tribute to the retirement of other employees, nor will the savings of 
other -employees be diverted to his use. 

A man entering the service, aged 45 years, at $100 per month, would 
have to put aside $6.53 a month in order to accumulate at 4 per cent 
compound interest $3,339, which is the cost of an annuity of $450 a 
year, beginning at age 70. It will be observed that this annuity is 
also 1.5 per cent of his pay for each year of service, the length of 
service in this case having been twenty-five 3 T ears. 

These illustrations show one advantage of the plan to be its justice 
to the individual, since the annuity that accrues to the benefit of the 
man who gives many years of his life to the Government service is 
proportionalty larger than that accumulated by the man who comes in 
at the same salary but too late in life to render long service. 

The plan contemplates two methods of settlement for the employee 
on arrival at the age of retirement. He may convert his savings with 
the increment of interest into one of the following options: 

(1) One cash sum. 

(2) An annuity payable throughout life. 


SUPERANNUATION IN CLASSIFIED CIVIL SERVICE. 


5 


These options are advisable, because the circumstances of employees 
vary so greatly that a settlement which would be desirable for one 
might not be wise for another. 

It is not merely the employee that remains in the service until he 
reaches the age of retirement who will benefit by this plan. A person 
separated from the service in an} T manner before that age will have to 
his credit a sum of money which he will be free to withdraw. In case 
of his death in the service, the amount of his savings with interest 
will be paid to his estate. 

The argument that “any retirement scheme which provides for 
refunds is objectionable, because it puts a cash premium upon resigna¬ 
tion,” is predicated upon the theory of the flat assessment of 5 per 
cent, or some such rate, upon all salaries, and has no applicability to 
the plan of accumulated individual savings here described. 

This brings out another advantage to the service under this plan. 
Under present conditions sheer humanity makes civil-service rules 
difficult of enforcement in very many cases. It is not only the super¬ 
annuated who become inefficient. Clerks are sometimes incapacitated 
in one way or another, or are habitually careless. A rigid enforce¬ 
ment of rules would result in their elimination from the service; but 
more than one chief of division has retained men and women whom 
he would be glad to dismiss, except that he knows they are absolutely 
penniless save for their monthly stipend. 

On the other hand, a provision for retirement would undoubtedly 
be an additional hold on many of the Government’s most valuable 
men. There are men of attainment, especially in scientific lines, who 
would like to work for the Government if they could afford to. The 
universities tempt them away, however, not merely with offers of 
larger salaries, but with the promise of some old-age provision. A 
university professor may possibly be a beneficiary of two retirement 
funds, that established by the university itself and that founded by 
Mr. Carnegie, whereas a Government official has no such prospect. 

Still another way in which the personnel of the service would 
undoubtedly be improved is through the retirement, under these con¬ 
ditions, of many employees before the retirement age. They would 
prefer to accept less annuity and be relieved from the cares of office 
at an earlier day, and in many cases the service would be improved by 
their retirement. 

It might not always be desirable to retire employees at the retire¬ 
ment age. Their services might be of great value to the nation and 
they themselves might be averse to retiring. Take the case of a Gov¬ 
ernment scientist engaged in research work. As long as he is young 
enough to carry on his experiments satisfactorily he should be per¬ 
mitted to do so. Therefore the arbitrary retirement of all who have 
reached the retirement age is not contemplated; but provision is made 
for considering the cases of those who may care to remain in the 
service after that age. 

This finishes the first part of the plan and the basis on which 
Government employees will be retired after about fifty years, when 
practically all the employees now in office w ill have passed away. If 
this were all of the plan, it would be open to criticism as unjust to the 
older employees, who are too advanced in years to provide funds for 
their own retirement. 

If these aged employees are entitled to any assistance at all in con¬ 
sideration of their past services, or if the service will be improved by 


6 


SUPERANNUATION IN CLASSIFIED CIVIL SERVICE. 


their retirement, the Government should provide the funds for their 
annuities. Proceeding on this premise, a scheme is proposed which 
contemplates the treatment of all employees alike that are now in the 
classified service, in proportion to their years of service, by giving 
every employee, at Government expense, an annuity, on arrival at 
retirement age, equal to 1.5 per cent of the total compensation he 
received for services prior to the enactment of this retirement 
measure, provided he remains in the service until he reaches that age. 

To illustrate: An employee now 70 years of age, who has been in the 
service fifty years, would be entitled to retire at once on an annuity 
equal to 1.5 per cent of his total compensation during those fifty years 
of service. 

An employee 40 years of age, who has been in the service fifteen 
years at the time of the enactment of this plan into law would on 
retirement thirty years hence be entitled to receive an annuity from 
the Government of 1.5 per cent of his total compensation for service 
up to the passage of such a law, or 22.5 per cent of his average annual 
salary during that time, plus the amount of his own savings from the 
time the law went into effect until his retirement, after thirty years, 
at the age of 70. Suppose that this employee receives a salary of 
$1,200 per annum throughout the whole term of his service. On retiring 
at the age of 70 he would be entitled to an annuity of $810 for the 
remainder of his life, $270 from the Government, as 1.5 per cent of 
his total compensation during the fifteen }^ears he served prior to the 
passage of the retirement law, and $540 as an annuity from his own 
savings; that is, 1.5 per cent of his salary for every year of service 
after the passage of the law. The annuity from the Government (the 
$270) would have no cash surrender value. It could be taken only as 
an annuity, never in a lump sum, and could only be obtained in case 
the employee remained in the service until he reached the retirement 
age. The $540, on the other hand, which represents his own savings, 
plus interest, could be converted into the cash sum necessary to buy 
that annuity ($4,007). He can always, on leaving the service, with¬ 
draw his own money, but the contribution by the Government for 
services rendered prior to the passage of this act must always be taken 
in the form of an annuity. None of these funds, whether the savings 
of the employee or the contribution of the Government, should be 
subject to attachment or an}^ other legal process. 

The plan provides that the period of service upon which the annuity 
to be paid by the Government is based shall be computed from the 
original employment, whether as a classified or unclassified employee. 
This may include service in one or more departments of the Govern¬ 
ment and periods of service at different times. 

The question naturally arises, How much will the adoption of this 
plan cost the Government? From the time of the passage of such a 
law all employees would begin to provide for themselves, so that ulti¬ 
mately the plan would be no expense to the Government beyond the 
payment of salaries to the necessary clerical force to handle the 
accounts. In the meantime, however, the Government would have to 
take care of the old employees as the} T reach retiring age, for services 
rendered prior to the adoption of the plan, until about fifty years from 
now, when the last one would have been paid off. The sum required 
to do this annually would gradually increase for a few years, reaching 
its maximum about thirty years after passage of the law. From the 
twenty-fifth to the thirt} T -second year after the adoption of the plan 




SUPERANNUATION IN CLASSIFIED CIVIL SERVICE. 7 

the amount each year is about the same. After the thirty-third year 
the amount each year drops off very rapidly until in fifty years the 
plan would be self-sustaining and there would be no more need of 
making appropriations for the superannuated. 

In 1904 the Bureau of the Census made a report on the Executive 
Departments, which is the latest authoritative information that we 
have regarding the personnel of the civil service. It is known as Bul¬ 
letin 12 and covers the service as of July 1, 1903. In order to ascer¬ 
tain definitely the maximum amount of money that the Government 
would have to pay during the next fift}^ years or so if this plan of 
retirement should be adopted, tables based on Bulletin 12 were pre¬ 
pared for all ages at which people are employed in the classified civil 
service, showing the annuities payable the year of the adoption of the 
plan and each year thereafter until all present employees are dead and 
their sum total, or what it would cost the Government to put the plan 
in operation and carry it through to completion. They show that the 
maximum cost of this retirement plan to the Government will be as 
follows: 


Maximum amount of annual appropriation by the Federal Government necessary to pro¬ 
vide a monthly annuity to each person in its classified civil service July 1, 1903 , upon 
attaining the retirement age of 70 years (the amount of annuity to be 1.5 per cent of the 
employee’s salary July 1 ) 1903 , for each year of service completed prior to that date). 


Year. 


Amount of 
appropria¬ 
tion. 


1907 . 

1908 . 

1909 . 

1910.. .., 

1911 . 

1912 . 

1913 . 

1914 . 

1915.. ... 

1916 . 

1917 . 

1918 . 

1919 . 

1920 . 

1921 . 

1922 . 

1923 . 

1924 . 

1925 . 

1926 . 

1927 . 

1928 . 

1929 . 


$725,110 
811,840 
908,188 
1,025,293 
1,157,181 
1,258,725 
1,370,710 
1,466,424 
1,526, 551 
1,570,768 
1,579,132 
1,564,974 
1,550,742 
1,534,636 
1,531,851 
1,512,159 
1,554,679 
1,546, 866 
1-, 550, 718 
1,555,588 
1,571,682 
1,589,167 
1,617,302 


Year. 

Amount of 
appropria¬ 
tion. 

i 1930. 

1,663,981 

j 1931. 

1,699,374 

1932. 

1,713,035 

1 1933. 

1,724,385 

i 1934. 

1,734,603 

| 1935. 

1,736,047 

1936.'. 

1,744,512 

1937. 

1,746,561 

1938. 

1,736,974 

1939. 

1,718,542 

1 1940. 

1,684,723 

I 1941. 

1,635,423 

1942. 

1,568,188 

1943. 

1,492,830 

1944. 

1,406,199 

1945 

1,314 000 

1946. 

1,211,837 

1947. 

1,103,182 

1948. 

990,583 

1949. 

889,324 

1950. 

772,735 

1951.| 

669,126 

1952. 

572,770 


Year. 

Amount of 
appropria¬ 
tion. 

1953. 

484,069 

1954. 

403,305 

1955. 

331,667 

1956. 

269,380 

1957. 

216,046 

1958. 

170,947 

1959. 

133,347 

1960. 

102,450 

1961. 

77,434 

1962. 

57,499 

1963. 

41,884 

1964. 

29,877 

1965. 

20,829 

1966. 

14,152 

1967. 

9,354 

1968. 

5,971 

1969. 

3,697 

1970. 

2,199 

1971. 

1,251 

1972. 

679 

1973. 

346 

1974. 

163 


It should not be forgotten that this is a maximum cost, and that the 
real cost will probably be greatly less, since many employees who 
enter into this competition will leave the service before reaching the 
age of 70. Compare this maximum cost of considerably less than 
$2,000,000 annually for a term of forty years with that of any other 
other plan ever proposed, and it will be seen how little is asked of the 
Government. 

It is interesting to note that one of the valuable features of the plan 
is the array of reliable statistics concerning a large body of represent¬ 
ative people that will gradually be collected if this retirement plan 
be adopted. In handling the accounts of the employees under this 
plan, records will necessarily be kept showing the mortality expe¬ 
rience of the employees in the various branches of the service and in 
different localities throughout the country, the rate of withdrawal 
























































































8 


SUPERANNUATION IN CLASSIFIED CIVIL SERVICE. 


from the classified civil service, and much similar information that 
may be of value and serve as a guide in future valuations and adjust¬ 
ments of any retirement plan, and in reducing the cost not only to 
the employees but to the Government as well. The records will 
eventually become of great interest to every individual in the United 
States who contemplates taking out a life-insurance police 7 , for the 
Government experience will prove conclusively whether the rates 
charged by insurance companies are just and reasonable or the reverse. 
At present it is impossible to say absolutely. They are usually based 
on a table known as the “American experience table of mortality,” 
compiled by the Mutual Life Insurance Company, of New York, 
which was made up from observation of about 60,000 selected lives. 
The proposed retirement plan for Government employees will secure 
a record of at least twice as* many lives at once and probably three 
times that number before long, under varied but classified conditions. 
The value of such an authoritative record would in itself justify the 
expenditure of the moderate sum necessary for the conduct of such 
an office. 

The bill originally drawn was referred to the National Civil Service 
Reform League, and has been modified in this draft in several particu¬ 
lars to conform to suggestions made by its officers. 

In making this draft the subcommittee has been favored with the 
advice and cooperation of the United States Civil Service Retirement 
Association, represented by Mr. Pickens Nagle, president of that 
association, and Mr. S. E. Faunce, vice-president. 

The subcommittee desires to give full credit to Mr. Herbert D. 
Brown for originating the central idea of the plan, and for a large 
amount of painstaking expert labor in working out the details and 
figures. 

In conclusion, we beg leave to say- that your committee has taken 
pains not only to study the details of this plan, as well as man} 7 others, 
but to submit it to the examination of recognized actuaries, Messrs. 
Hiram Messenger and Benedict D. Flynn, of the Travelers’ Insurance 
Company, of Hartford, and to have the necessary computations made 
so that nothing may be left to the imagination. The details have been 
thoroughly worked out and are embodied in the accompanying bill, in 
proper form for submission to Congress. 

Yery respectfully, 


Arthur P. Davis, 

Chairman. 


Chas. Lyman, 

Treasury Department. 
Bayard Wyman, 

Post- Office Department. 
John W. Holcombe, 

Interior Department. 
A. Zappone, 

Department of Agriculture. 
Geo. W. Leadley, 
Department of Commerce and Labor. 
G. R. Wales, 

Civil Service Commission. 
The Committee on Department Methods. 


[Note. —The signature of Mr. John C. Scofield, War Department, is lacking on 
account of his absence from his office, due to sickness.] 



SUPERANNUATION IN CLASSIFIED CIVIL SERVICE. 


9 


A BILL For the retirement of employees in the classified civil service of the Government. 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled, That, begining with the first day of July next following the 
passage of this act, there shall be deducted and witheld from the monthly salary, 
pay, or compensation of every officer or employee of the United States to whom this 
act applies an amount that would be sufficient, with interest thereon at four per 
centum per annum, compounded annually, to purchase from the United States, under 
the provisions of this act, an annuity for every such employee, on arrival at the age of 
ret irement as hereinafter provided, equal to one and one-half per centum of his annual 
salary, pay, or compensation for every full year of service, or major fraction thereof, 
between the date of the passage of this act and the arrival of the employee at the age/ 
of retirement. The necessary deduction hereby provided for shall be based on such 
annuity tablb as the Secretary of the Treasury may direct, and interest at the rate of 
four per centum per annum, compounded annually. Such deductions shall be varied 
to correspond with any change in the salary of the employee. 

Sec. 2. That the amounts so deducted and withheld from the salary, pay, or com¬ 
pensation of each employee shall be deposited in the Treasury of the United States 
and shall be invested from time to time by the Secretary of the Treasury in State, 
municipal, railroad, or other bonds approved by him. The interest on said bonds 
shall be paid into the Treasury of the United States and shall be reinvested in the 
same manner as above described. The earnings shall be annually credited to the 
individual accounts of the employees from whose salary, pay, or compensation the 
deductions have been made, and the moneys deducted, together with the interest 
added thereto, shall be held and invested by the Government while the employee 
remains in the service, and after retirement as required for an annuity payment if he 
selects such option as hereinafter provided. 

Sec. 3. That upon retiring at the age of retirement the employee shall withdraw 
his savings with the increment of interest as herein provided, under one of the 
following options: 

Option I. In one sum. 

Option II. In an annuity payable quarterly throughout life. 

The annuity herein provided for shall be based on such mortality tables as the 
Secretary of the Treasury may direct, and interest at the rate of four per centum 
during the first two years of the operation of this act. After the act shall have been 
in operation two years the interest assumed shall be the average rate the retirement 
fund shall have been earning during the two years prior to the first of January pre¬ 
ceding the date of retirement. Upon the death of an annuitant his estate shall be 
paid the proportional part of the current quarterly payment. 

Sec. 4. That upon absolute separation from the civil service prior to the retirement 
age, and only upon such separation, there shall be paid to the employee or his estate 
the amount of his savings, with the increment of interest credited thereon, in one 
sum: Provided, That any employee who shall voluntarily withdraw from the service 
before the age of forty-five years shall forfeit the accrued interest on his savings, and 
only the amounts deducted from his salary shall be returned to him. In case of 
death after reaching the retirement age and before deciding upon an option the sav¬ 
ings with the increment of interest credited thereon shall be paid to the estate of the 
employee. 

Sec. 5. The retirement age herein referred to shall be sixty years for Group One, 
which shall consist of employees whose duties require great physical activity; sixty- 
five years for Group Two, which shall consist of employees whose duties require a 
moderate amount of physical activity; and seventy years for Group Three, which 
shall consist of employees whose duties are mainly intellectual. And the President 
of the United States shall designate the branches of the service to be included in each 
group. 

Sec. 6. Every employee to whom this act applies shall be entitled on reaching the 
retirement age, or, having already passed that age, to retire from the service under 
the provisions hereinbefore contained, and also in addition to the annuity herein pro¬ 
vided for by his own contribution from his salary to receive from the United States, 
during the remainder of his life, an annuity equal to one and one-half per centum of 
his total compensation during service prior to the taking effect of this act, and the 
Secretary of the Treasury is hereby authorized and directed to pay such annuity 
quarterly upon certification of the retirement of such employee by the proper appoint¬ 
ing officer under whom he last served: Provided, That after having served the United 
States twenty years an employee may be retired by the proper appointing officer by 
reason of usability not due to vicious habits, or by reason of exigencies of service but 
without fault or delinquency on his part, or on his own application after forty years’ 
service, and upon such retirement shall be entitled to the benefits of this act. 

S. Doc. 308, 60-1-2 




10 


SUPERANNUATION IN CLASSIFIED CIVIL SERVICE. 


Sec. 7. The provisions of this act shall apply only to the classified civil service, 
which is hereby defined to include all officers and employees in the executive civil 
service of the United States, except persons appointed by the President and confirmed 
by the Senate, and mere unskilled laborers. No person serving in a position excepted 
from examination or registration as defined in the civil-service rules shall be included 
within the provisions of this act unless he has served in a competitive position for at 
least one year. Whenever any person becomes separated from the classified service 
by reason of appointment in the unclassified service, such separation shall not operate 
to take him out of the provisions of this act. The President shall have power, in his 
discretion, to exclude from the operations of this act any groups of employees whose 
tenure of office is necessarily intermittent or of uncertain duration. 

Sec. 8. The period of service upon wliich the annuity to be paid by the United 
States is based shall be computed from original employment, w r hether as a classified 
or unclassified employee, and shall include periods of service at different times and 
service in one or more departments, branches, or independent offices of the Govern¬ 
ment, the Signal Corps prior to July first, eighteen hundred and ninety-one, and the 
General Service in or under the War Department prior to May sixth, eighteen hundred 
and ninety-six. 

Sec;. 9. The Secretary of the Treasury shall prepare and keep all needful tables, 
records, and accounts required for carrying out the provisions of this act. The records 
to be kept shall include data showing the mortality of the employees in the various 
branches of the service and in different localities throughout the country, and the rate 
of withdrawal from the classified service, and any other information that may be of 
value and may serve as a guide for future valuations and adjustments of the plan for 
the retirement of employees. 

Sec. 10. Within thirty days before the arrival of an employee at the age of retire¬ 
ment the proper appointing officer shall certify to the Secretary of the Treasury 
regarding the efficiency of such employee, with a statement whether the public 
interest requires his continuance in the service or his retirement, and such certificate 
and statement shall be conclusive. If he certifies that by reason of the efficiency of 
any employee who has reached the retirement age, and is willing to remain in the 
service, his continuance therein wmuld be advantageous to the public service, such 
employee may be retained for a term not exceeding tw r o years; and at the end of the 
two years he may by similar certification be continued for an additional term of two 
years, and so on. Upon the failure of the proper appointing officer to make the 
above-described certificate, it shall be the duty of the Secretary of the Treasury to 
place such employee upon the retired list in accordance with the provisions of this act. 

Sec. 11. None of the moneys mentioned in this act shall be assignable either in 
law or equity or be subject to execution or levy by attachment, garnishment, or 
other legal process. 

Sec. 12. For the clerical and other service and all other expenses necessary in car¬ 
rying out the provisions of this act, during the fiscal year nineteen hundred and 
nine, including salaries and rent in the city of Washington, there is hereby appro¬ 
priated the sum of fifty thousand dollars; and also the amounts necessary for the 
annuities to be paid by the United States, under section six of this act, from year to 
year are hereby appropriated out of any moneys in the Treasury not otherwise 
appropriated, to be available until expended. 

Sec. 13. The Secretary of the Treasury is hereby authorized to perform or cause to 
be performed any and all acts, and to make such rules and regulations as may be 
necessary and proper, for the purpose of carrying the provisions of this act into full 
force and effect. 


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